CLM software promises, disappointments, and paths to success
Contract Lifecycle Management (CLM) software can be an extremely powerful tool that works like magic when fully optimized. But getting it to function at that level takes time, resources and optimization. When shopping for a CLM, legal departments get promises of simplicity and seamless functionality. Do any of these guarantees sound familiar?
“All you have to do is upload your agreements and you will have a clear database with intelligent fields, so you have the data at your fingertips.”
“Our API connects to Salesforce. All the sales team has to do to generate a new agreement is use a Salesforce plugin. They answer a few questions and the CLM does the rest. It’s actually magic. Here is your contract.”
“It’s a digitized filing cabinet for you, so you can pull out all the data points you want. These can be party names, dates, whatever fields you want.’
Ultimately, these promises can be delivered, but when purchasing CLM software, problems often persist long after the initial implementation. One of the hurdles we face is the initial input of hundreds (or thousands) of old agreements. Because old contracts are not all structured the same, the data turns into a morass as fields are filled with incorrect information, formatting is inconsistent, etc.
Because CLMs are not built to find gaps in data, they do not allow users to quickly identify where the AI extractions may be incorrect. They don’t allow users to quickly get through large amounts of data, creating a resource-intensive ‘hunt and peck’. ‘exercise that requires users to manually search the imported data. Worse, many CLM buyers don’t realize this scenario could be a problem until they try to find something specific; it can become difficult to trust that the entire data set is reliable without double-checking.
There are a handful of post-purchase pain points that expert CLM users can help overcome to unlock the magic of these tools.
Data hygiene
Data hygiene plays a crucial role in maximizing the usability of any CLM. Simply put, it is the moral equivalent of ‘garbage in, garbage out’. Experts can ensure the right data is retrieved and stored in the right locations and in a consistent format, including:
- Names of parties: A user wants to clear all their agreements with Acme Corp. to know; Did CLM get the right name out (Acme, not acne)? Or all relevant variants of it (Acme Inc., Acme Incorporated, etc.)?
- Dates: A user searches for a contract executed on August 8, 2023; was the date formatted as 8/7/2023 (American) or 7/8/2023 (British) or some other variant?
- Auto-renewal details: A user must be aware of the termination of a contract; are all critical details (execution date, term, notice period, cancellable for convenience) can be requested?
- Custom/intelligent fields: These add-ons for CLMs require additional fees; Has the CLM extracted key data points from the relevant clauses?
Roll-ups/control summaries
Roll-ups or summary views are the data that truly defines the entire relationship between the parties involved in a contract. Any contract changes made during the course of the relationship can be tracked at the top of the agreement without having to go through the manual process of making those updates.
For example, a CLM user who searches Acme may want to know what limitation of liability governs the relationship with Acme. The signed Acme Master Services Agreement (MSA) is twenty years old, but there have been seven amendments and fifteen different work orders during the term of the contract. The original MSA no longer contains the current information or language applicable to that clause; perhaps one of the amendments was a change in the language of the limitation of liability. The AI that CLMs rely on to review and extract data has not yet evolved to the point where it can determine which language replaces other languages without manual confirmation from users. Our contract experts identify and place these documents in the correct order, creating a reliable and accurate overview.
Buyers of CLM platforms should be aware of these realities before and after investing in the solution and plan for these complexities. Consider consulting with a trusted partner to simplify the post-signing installation process and unlock the magic that CLMs are capable of.
